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Hawaiian Telcom acquires Wavecom Solutions for $13 million

Hawaiian Telcom (Nasdaq: HCOM) is adding more flavor to its business and wholesale service suite by acquiring Wavecom Solutions' CLEC business for $13 million in cash.

Honolulu-based Wavecom is a facilities-based CLEC that provides voice, data and converged services to small and medium-sized business and carrier customers.

A key attraction here is the fiber assets. Wavecom boasts a six-island subsea and terrestrial fiber network that currently serves over 1,700 customers throughout Hawaii. Having these extra fiber facilities on hand will help Hawaiian Telcom grow its IP-based business services revenue base.

Business services overall has been a sweet spot for Hawaiian Telcom. In Q1 2012, the service provider reported that strong equipment sales and the growth of managed services revenue drove up business revenues 5.4 percent year-over-year, to $42.1 million. What's more, the growth of strategic services-- including Ethernet, IP VPN and Dedicated Internet Access (DIA) services and broadband--rose 9 percent and 6 percent, respectively.

The acquisition complements Hawaiian Telcom's ongoing efforts to upgrade and augment its own fiber and IP/MPLS networks.

"By integrating Wavecom Solutions' six-island subsea and terrestrial fiber network and business capabilities with the strength of Hawaiian Telcom's technology and operations, we'll be better positioned to execute on our strategic plan and drive long-term value for shareholders," said Eric K. Yeaman, president and CEO of Hawaiian Telcom, in a release announcing the deal.

Hawaiian Telcom said that it would pay for Wavecom with existing liquidity using cash on hand. Upon completion in the next 90-120 days, the telco estimates that the acquisition will generate $4.5 million of annual unlevered free cash flow due to net incremental revenues and EBITDA of approximately $7 million and $3.5 million, respectively, in addition to network related capex synergies.

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